ArmorGroup North America, the contracting firm at the center of a recent scandal over inappropriate behavior by security guards at the U.S. embassy in Kabul, is facing new charges that it lied about its capabilities in order to get the State Department contract.

And as the stories and photographs of lewd behavior by embassy guards continue to mount, two former employees of the company are claiming that the State Department and high-ranking company officials have known about allegations of sexual deviance, inadequate training and poor contract management since 2007.

The latest charges were contained in a whistleblower retaliation lawsuit filed Thursday in the U.S. District Court for the District of Columbia by James Gordon, the company’s former director of operations, against ArmorGroup North America and ArmorGroup International. Another former employee elaborated on the allegations at a news conference.

The charges come on top of a report and pictures released last week by a Washington watchdog group, the Project on Government Oversight, that portrayed some embassy guards as wild partiers and misfits who drank vodka from the cracks of colleagues’ buttocks and performed other unsavory acts.

Gordon, who left the company in February 2008 after bring stripped of his duties, claims in the lawsuit that ArmorGroup employees in Kabul and their managers hired prostitutes, with one trainee bragging that he “could buy girl for $20,000 and turn a profit in a month,” according to his complaint.

Neither ArmorGroup nor the State Department investigated those claims, Gordan’s lawsuit says. Instead, it alleges, ArmorGroup officials were enraged by Gordon’s reports and stripped him of his duties; in February 2008, he resigned from the company.

ArmorGroup’s parent company, Wackenhut Services, said in a statement there is no merit to Gordon’s allegations of whistleblowing or retaliation.

“We found that Mr. Gordon voluntarily resigned from AGNA several months prior to WSI acquiring the company, and that there was no merit to his assertion that his departure was tied to whistle blowing or retaliation by AGNA,” said Susan Pitcher, a spokeswoman at Wackenhut Services. “We found that Mr. Gordon's factual allegations and legal claims were overstated, ill-founded, not based on any personal knowledge, or otherwise lacking in legal merit.”

“We have aggressively overseen this contract since it was let in March of 2007 and went into force in July of 2007,” said State Department spokesman P.J. Crowley in a briefing Thursday. “It’s important that at no time, in our view, was the security of the embassy ever threatened or compromised.”

The same month as Gordan resigned, James Schmitt, senior vice president of ArmorGroup, testified to the Senate Homeland Security and Governmental Affairs Committee about the company’s high standards.

“Our ‘quiet professionals’ are prepared to provide our protective services in an ethically sensitive fashion in the most complex of environments,” Schmitt’s statement said.

“Unfortunately, a number of newer [private security contractors] working in support of U.S. government programs in Iraq and elsewhere, but without this rigorous approach to ethics, have found themselves embroiled in difficult incidents which have resulted in controversy surrounding the [U.S. government’s] use of private security contractors,” his testimony said.

Gordon and another former employee, John Gorman, also claim that ArmorGroup lied about its abilities and low-balled its bid in order to win the $187 million-a-year contract to provide security services to the U.S. embassy in Kabul. But instead of properly vetting the company and its capabilities, the pair said, the State Department and its contracting team – still reeling from abuses committed by Blackwater Worldwide and other contractors in Iraq -- gave ArmorGroup a free pass.

“AGNA won the security contract by submitting a ridiculously low bid that basically ignored operational realities,” Gorman told reporters during a press conference Thursday at which Gordan’s lawsuit was handed out.

Gorman, a retired Marine who managed the guard force at the embassy in 2007, said he and two other managers, James Sauer and Pete Martino, tried to get the company to fix the problems in Kabul. For instance, scrimping led to long shifts at the embassy and the hiring of trainees who were made to participate in hazing activities, he said. In addition, he said ArmorGroup claimed to have more personnel than it actually did and also claimed to run a training facility and firing range “that just didn’t exist.” The company also hired guards who had no basic training or military experience, he alleged.

“All of these claims that they made, made them look better than their competitors,” Gorman said.

When Gorman, Sauer and Martino told ArmorGroup about the problems and requested additional resources to help correct them, Gorman said, Vice President of Operations Michael O’Connell responded in a March 2007 e-mail that “AGNA bid this at a very low price and a very low margin,” and not to expect any changes.

The e-mail was contained in Gordan’s lawsuit.

Finally, two and a half months after he was hired, Gorman, Sauer and Martino took their complaints to an embassy official, Gorman said. The following day, he said, the three men awoke to the sound of O’Connell knocking on their doors with airline tickets in hand, and they were fired.

Gorman alleged that the drive to cut costs led to significant compromises in security at the embassy, including paying low wages to foreign guards who spoke little English. The company told the State Department it had interpreters who could provide translation, but English-speaking employees of the company said they routinely had problems communicating with AmorGroup’s Afghan employees.

Asked whether State Department assertions that security had not lapsed at the embassy because of all the problems, Gordon was incredulous.

“How can you effectively respond to a security situation when you now suddenly have to get into the scenario of having to use pantomime to convey a message to a member of the security force?” Gordon said. “It is ludicrous to think that is a safe environment and that is an effective security force.”

At least eight guards have been fired at the embassy since last week’s allegations surfaced, and the State Department is investigating.